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IDEF 2017: How Turkey Deals with Russia and the US in the Defence Sector

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IDEF 2017: How Turkey Deals with Russia and the US in the Defence Sector

In June-July 1964, when relations between Turkey and the US were soured because of the Cyprus issue and Moscow, still led by Nikita Khrushchev, was ready to improve Soviet-Turkish relations, Ismet Inonu, then President of Turkey said: “Encounters with big states are like getting into bed with a bear.”

In other words, Inonu was pointing out that Turkey has to be extremely careful, both with the Soviet Union and the US. The following analysis clearly shows that Turkey still needs to be extremely careful; Turkish officials need to understand and reach accurate conclusions when making deals in the defence sector with both Russia and the US. Furthermore, it should be emphasised that the presidents of both countries and CEOs of major defence companies do not consider Turkey as being an equal partner, even if Turkish President Recep Tayyip Erdogan wishes to be on equal terms with the leaders of both countries.

Erdogan’s Desires versus Reality Check

On 26 January, Erdogan stated: “An additional important issue between Turkey and the US is the need to further improve the economic relationship, particularly in the field of the defence industry. There were many joint steps we have taken in the field of the defence industry until now. Will we continue through joint investments or through the logic of ‘You are the market, I am the trader?’ We prefer to continue with joint ventures.”

On 24 January, the day that the cancellation of contract between the Austrian company AVL and the Turkish company Tumosan was reported, an unidentified official from Turkey’s procurement agency, the Undersecretariat for Defence Industries (SSM), said: “Save for a couple of strategic systems, Western producers are no longer ‘indispensable’ for customers like Turkey since our local industry’s capabilities are far more advanced today than there were a decade ago. It may cost us extra time, but we can develop systems on our own.”

Apparently, cancellation of the contract reflected a reluctance on the part of supplier governments to transfer technology (ToT) and intellectual property to Turkey and its own inability to develop an indigenous engine for the MBT programme. In a more complicated case of Turkey’s developing its first indigenous long-range air-defence system, T-LORAMID, it remains to be seen whether or not the development will be successful.

At the moment, Aselsan and Roketsan are pursuing development of T-LORAMIDS alone. In January 2013, when Turkey launched the programme, it decided to look for solutions Chinese and Russian manufacturers, since Turkey’s Western partners were not then ready for ToT, co-production arrangements or, indeed, an affordable price tag. Although Turkey selected China Precision Machinery Import-Export Corporation for the system in September 2013, it cancelled the deal under pressure from its NATO allies, underscoring the pitfalls of such a choice.

The incompatibility of Chinese/Russian systems with those of NATO highlights a strategic dilemma for Turkey. Furthermore, the preliminary decision to choose a Chinese system raised a host of questions in the US and NATO regarding the Turkish approach and decision-making process. Thus far these questions have neither been addressed nor answered by Turkey even though negotiations with US and European bidders continue. In early October 2016, the Russian bidder – initially disqualified for being too expensive – was invited to bid again. Apparently Erdogan wanted to show Russian President Vladimir Putin there were no ill feelings regarding Putin’s decision to impose economic sanctions on Turkey after a Turkish pilot shot down a Russian Su-24 bomber in November 2015.

With the inclusion of a Russian manufacturer in the competition, Turkey has opened up a three-way race. But, in the same way as applied to the previous Chinese solution, a Russian system will not be interoperable with US and NATO assets deployed in Turkey.

Does that mean the Turks have failed to learn from their previous experience with the Chinese manufacturer, or has Turkey decided to use the S-400 as bait to get a better offer from Western bidders? It appears that Turkish defence industry officials have decided not to upset the equilibrium achieved by Erdogan and Putin, while simultaneously seeking a better offer from the Western bidders. One official close to the Russian MoD said in late November 2016 that, “the issues pertaining to delivery of the S-400 to third countries remain very sensitive. Even on the deal with a friendly China, the Russian General Staff and the FSB exercised a veto. Furthermore, the FSB is unlikely to approve implementation of the deal since Turkey is a NATO member and Turkey also wishes to have access to ToT. The latter issue is of prime importance for Russian national security.”

The Russians also understand that NATO members will again raise the issue of interoperability. In other words, even if Turkey selects a Russian air-defence system and the FSB approves the sale, the Russian system will have be limited to a stand-alone architecture. In addition, Turkey and Russia will need to agree to a mutually acceptable timetable since there is a production backlog for China and India and that means the S-400 would be delivered some time after 2020.

According to Russian sources, the Turkish and Russian Intergovernmental Committee for Military-Technical Co-operation met for the first time in Moscow between 12 and 14 December 2016. In the words of Vladimir Kozhin, Russian Presidential Aide, “the discussions were constructive, showing a serious drive to establish full-scale military-technical co-operation.”

According to Sergey Chemezov, CEO of Rostec Corporation, speaking at IDEX 2017, “Turkey is interested in the S-400, negotiations are ongoing and the issue of financing the deal is currently being discussed.”

Despite Chemezov’s statement, it remains unclear whether the S-400 has any chance of selection by and delivery to Turkey. ToT, an affordable price and co-production arrangements remain the thorny issues to be discussed. Furthermore, a new offer to build the Medium Extended Air-Defence System (MEADS) may still be more attractive to Turkey than a problematic purchase of the S-400. The new offer supports the assertion that the S-400 was used as bait to get a better offer. The unidentified Turkish official was, however, not optimistic regarding rapid progress to official contract negotiations between Turkey and the three MEADS nations (Germany, Italy, and the US), saying: “For that stage we will need government-to-government discussions and finally a governmental green light in Ankara.”

Fikri Isik, Turkish Minister of Defence, said on 22 February that even though talks between Turkey and Russia for the potential acquisition of the S-400 system, “made quite [substantial] progress, we are not at a stage of signing a deal tomorrow.”

Thus, in both cases, Turkey is trying its best to get a better deal and the challenges ahead remain as difficult as before and remain at the core of American-Turkish defence industry relations. A similar tactic of baiting a hook is unlikely to work in the following case, since Lockheed Martin’s management, for instance, will be more assertive in negotiations and will not give in to the demands of their Turkish counterparts.

American-Turkish Co-operation: Limited in Scope

Although Turkey’s involvement in the F-35 programme is fairly extensive, Turkey is not exactly the equal partner it aspires to be. Despite the active participation of about 10 Turkish companies, industrial involvement is confined to the manufacture of Western design. Turkey has been given approval to build its own F-35 engines and was also selected to be the first European regional production and overhaul centre for the Pratt & Whitney engine, but this work does not require highly skilled staff.

Thus a certain degree of frustration within Turkish defence industry circles resulted in simultaneous pursuit of the Turkish indigenous fighter programme, TF-X, aimed at replacing the Turkish Air Force’s F-16 fleet. BAE Systems recently confirmed support for the design phase underlines Turkey’s continued inability to design and develop local fighter craft alone. A new agreement between BAE Systems and Turkish Aerospace Industries (TAI) was signed on 28 January. Which means the statement made above that, “we can develop systems on our own,” is neither sincere nor accurate. Turkey is not yet where it wishes to be, although both Aselsan and Roketsan, the two leading Turkish manufacturers in the electronic business, have made great strides in recent years.

The same can be said for TAI, but developing a fighter aircraft from a clean-sheet design and making this aircraft competitive on the international market is not yet within its abilities.

In conclusion, Turkey is very much constrained in its dealing with Russia by being a member of NATO. Russian defence exports to Turkey in the past have been very limited in scope and mainly related to servicing of military equipment such as BTR-80 APCs and Mi-17 helicopters delivered in the early 1990s. In 2008, Turkey purchased 80 KORNET ATMs and that was all. It is therefore something of an exaggeration to talk about co-operation between Turkey and Russia; it barely exists, even if the first meeting in Moscow may be a sign of things to come. The view that Turkey is a market for both Russian and American defence industry manufacturers remains a problem for Erdogan and his administration, who have apparently yet to learn that verbal statements alone are not sufficient to turn Turkey from a market to a full-fledged partner.

A gap remains between Turkey, Russia and the US – one that for the time being remains difficult to close. In other words, Turkey remains a market, not the equal partner it aspires to become; and as long as the issue of ToT remains sensitive for Russia and the US, Turkey needs to look for different partners elsewhere.

Otokar submitted a final offer for serial production of 250 ALTAY MBTs (Turkish National Main Battle Tank Programme) over five years, stating that it could start production within 18-22 months of receiving a Serial Production Phase contract. (All photos via MT’s editorial staff, none by the author)

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